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A proposal for a Singaporean 'charter city' in Australia

A Singapore-style city in Australia, governed by its own basic law, funded by investors. Could this help Singapore overcome its land constraints?

Singapore, a tiny island city-state in the tropics, is starved of land, its growth constrained by its limits. Meanwhile, in Australia, vast landscapes lie empty, with states competing for people. Can the two countries meet each other's needs?

Here is my proposal for "charter cities". More precisely, here is a proposal to create a Singaporean charter city in Australia. The idea builds on the special and strong relationship between the two countries and is not as outlandish as it may appear at first glance.

In an essay published in 2015, on what the Singapore of 2065 might look like,Monetary Authority of Singapore managing director Ravi Menon envisaged a future where Singapore has retirement communities in Perth.

Last year, Straits Timesopinion editor Chua Mui Hoong wrote an article asking if Australia might become Singapore's hinterland. Specifically, she referred to the upgrading of ties between the two countries and the signing of a comprehensive strategic partnership agreement. She also referred to the Australian government's plans to develop northern Australia and envisaged opportunities for Singaporean residents and businesses.

I would like to weave together these threads into a concrete proposal for a charter city.

The idea of a charter city itself is quite old. One can see it taking place in 760BC in Qart Hadasht, the "new city", or what later came to be known as Carthage - modern-day Tunis in Tunisia.

One can envisage a 21st-century Carthage in the northern parts of Western Australia. Under the leadership of Singapore's Prime Minister Lee Hsien Loong and Australian Prime Minister Malcolm Turnbull, we could well see this charter city come to fruition within a decade.

CHARTER CITY

But what exactly is a modern charter city, and why would it be of interest to either country?

A charter city is a city region - a city and its hinterland - governed according to a charter that represents an international treaty.

In 2009, Dr Paul Romer, a prominent American economist, proposed the creation of charter cities in underdeveloped countries . However, his attempts to create such cities in countries like Madagascar and Honduras came to no fruition.

The logic of charter cities can be extended to situations governed solely by the dynamics of supply and demand. The supply is abundant land under the patronage of a fully developed democracy - Australia - and the demand is a new global city that emulates Singapore.

The charter city I have in mind is one built in Australia but governed by its own rules. The city remains under Australian sovereignty but can offer a separate citizenship that does not lead to residency rights elsewhere in Australia.

In essence, charter cities - sometimes also referred to as special administrative regions, such as Hong Kong or Macau, or as economic zones, such as the Visakhapatnam Special Economic Zone in India's Andhra Pradesh - allow Singapore and Australia to leverage the power of different legal systems to the end of boosting their respective economic development.

Singapore and Australia have many incentives for creating charter cities. These include macroeconomic as well as microeconomic incentives, and short-term as well as long-term ones. Probably, a hypothetical scenario will best illustrate the most salient of these.

WHAT A SINGAPORE CHARTER CITY MIGHT LOOK LIKE

Imagine that it has been decided to create a greenfield charter city in the north-west of Western Australia. The charter city is christened Dilga, named for the Karadjeri goddess of fertility and growth.

Dilga is to be developed by a holding charter city company (CCC), which is a joint venture between four investor groups, each accounting for 25 per cent of the total equity.

First, Western Australia obtains equity by providing 1,000 sq km on which Dilga is to be built - roughly the size of Hong Kong.

The Commonwealth of Australia receives equity by providing a military base juxtaposed against Dilga.

Singapore obtains equity by providing the infrastructure.

The last 25 per cent comes from the private sector, in exchange for the rights to utilise Dilga's land and infrastructure.

Dilga increases its equity in agreement with the original partners by selling new shares in the CCC, as well as through debt instruments.

The city makes its profit through a mix of city-owned corporations and tax revenue. All four partners share in this profit.

The four partners draft Dilga's basic law. This Constitution, promulgated concurrently by Singapore, Western Australia and the Commonwealth, is then deposited with the United Nations.

During a 10-year transitional period, the CCC is in charge of governing Dilga. The first citizens come mainly from Singapore, but also from Western Australia and other Australian states.

Later, immigrants obtain the right to a representative and democratic government. Dilga is now administered in a fashion similar to that of Hong Kong and Macau, except its status as a charter city is guaranteed in perpetuity.

Many people choose to move to Dilga. They do not pay any income tax during the transitional period. Young people are attracted by the ease with which they can obtain citizenship, and a consistently low unemployment rate.

Dilga becomes popular with tourists, especially from Perth. They see it as safer to visit. It is closer and friendlier and prices are not much higher. They do not even need a passport to get there.

More tourists are attracted as much by Dilga's unique atmosphere as by their friends and relatives who already live there. Investors across the globe see this boom and, just like in Las Vegas in the 1930s, they develop theme parks, casinos and resorts. Over time, the number of construction cranes on Dilga's skyline makes cities like Dubai look flaccid.

Dilga is finally fully functional. It requires a steady stream of natural resources such as iron ore, gas and petroleum. Western Australia capitalises on the new market, much closer to the source. Savings in transportation costs alone creates a competitive advantage.

Dilga is playing a growing role on the international stage too, absorbing Australia's refugee quota. It is also a showcase for green technologies, especially renewable energy resources, and efficient seawater desalination plants.

In fact, Dilga is such a success that, in time, Singapore replicates this charter city concept elsewhere.

Singapore is seen as a trustworthy partner and welcomed by other countries with vast land that need an economic boost. Its competent, trustworthy diaspora now has many cities to live in.

The habit of welcoming immigrants and working across cultures, so embedded in Singaporeans' DNA, is transplanted into these charter cities.

As Singapore ponders its future and gears up for an all-encompassing Committee on the Future Economy report, it could do with a dose of out-of-the-box thinking as to what is possible for Singapore to break beyond its growth constraints. Having a network of charter cities could add considerable growth to the Singapore economy and expand the limits of growth for its people.

• Dr Benjamen Gussen is a lecturer in law at the School of Law and Justice, University of Southern Queensland, in Australia.

A version of this article appeared in the print edition of The Straits Times on January 24, 2017, with the headline 'A proposal for a Singaporean 'charter city' in Australia'. Print Edition | Subscribe